## Facts

- Plaintiffs were a class of former Fiatallis North America, Inc. (FANA) salaried and hourly employees (and surviving spouses) who retired between the late 1970s and 1988.
- Before or at retirement, each retiree received one of several Summary Plan Descriptions (SPDs) describing medical and dental coverage for retirees and spouses.
- Multiple SPDs used language suggesting coverage would continue for life (e.g., coverage “remains in effect as long as your or your surviving spouse are living,” and spouses could continue coverage until death, remarriage, or other group coverage).
- None of the five SPDs at issue included an express reservation-of-rights clause stating that FANA could amend or terminate retiree medical or dental benefits.
- In the mid-1980s, FANA examined the scope of its retiree-benefit obligations and consulted counsel as costs rose.
- In 2001, FANA notified retirees of increased costs and potential benefit changes that retirees alleged effectively reduced promised, low-cost lifetime coverage.

## Issues

1. Whether “lifetime” or similar duration language in retiree-benefit SPDs, without any reservation-of-rights clause, unambiguously vested retiree medical and dental benefits under ERISA.
2. If the language is ambiguous, whether summary judgment for the employer is improper and the case must proceed for further factual development.

## Decision

- The Seventh Circuit reversed the district court’s grant of summary judgment for defendants and remanded.
- The court held that the SPDs’ “lifetime” and similar language, in the absence of limiting reservation-of-rights language, was ambiguous as to whether benefits vested.
- The court did not decide that benefits were vested; it held only that the documents could reasonably be read either to vest benefits or not, requiring further proceedings.

## Legal Principles

- ERISA welfare benefits (including retiree medical and dental coverage) do not vest by default, but an employer may contractually agree to vest them.
- Vesting disputes turn on interpretation of plan documents, including SPDs, applying ordinary contract principles.
- Where plan language is ambiguous on vesting, courts may consider extrinsic evidence to determine the parties’ intent and summary judgment is generally inappropriate.
- “Lifetime” language may be treated as limited by an express reservation-of-rights clause; without such a clause, similar “lifetime” language can create a triable ambiguity rather than resolving the vesting question as a matter of law.

## Conclusion

Because the SPDs repeatedly described retiree coverage in lifetime terms and contained no express reservation of FANA’s right to amend or terminate those benefits, the Seventh Circuit found the plan language ambiguous on vesting, reversed summary judgment for the employer, and remanded for fact-finding on whether FANA promised vested lifetime benefits.


Bland v. Fiatallis N. Am., Inc., 401 F.3d 779 (7th Cir. 2005)